FORTVILLE — Mt. Vernon Schools is at the top of the list of financially strapped districts that will soon receive help from the state’s Rainy Day Fund.
In the wake of legislation signed Monday by Gov. Mitch Daniels, MV will now have a chance to overcome its mounting financial problems, including a $4.9 million deficit. The bill authorizes loans to a handful of school corporations, and MV officials plan on requesting about $3.5 million.
The first step will be to remove a referendum from the May ballot. The question would have asked voters to give the district permission to restructure its debt payments.
About 10,745 ballots will have to be reprinted. At the school board meeting on Monday, the board gave Superintendent Bill Riggs unanimous approval to change the ballot and seek the loan.
The law signed Monday allows MV to restructure its debt without putting the issue before voters. The second step will be to begin that process.
The effect will be to free up funds and extend the school system’s debt further into the future. The potential arrangement could cost Mt. Vernon an additional $55 million in total debt payments by 2041.
The early cash infusion from the Rainy Fay Fund is especially good news for MV in relation to the transportation budget. Rumors of either charging families for transportation or entirely shutting down the bus system persisted for months after the district began more significant budgetary cutbacks last fall.
With the debt restructuring, more money will be freed to pay for transportation services.
Mt. Vernon has been one of the hardest-hit schools in the state by what officials call “a perfect storm” of factors that contributed to funding shortfalls. Those include the district’s debt from its expansion project, property tax caps and the recession.
That has resulted in sharply less money being available for operating expenses. In three years, MV has made $4.2 million in cuts, with about $2.4 million coming from layoffs.
House Bill 1192 permits a loan totaling $18.5 million to all eligible school districts to be repaid within six years. The hardest-hit schools are unable to borrow privately because they are categorized as “high risk.”
In addition to MV, the other school districts eligible for the special loans are Franklin Township in Marion County; Hanover schools; and Boone Township in Porter County.
The legislation was sponsored by Rep. Bob Cherry, R-Greenfield, who represents the MV area; and Rep. Mike Speedy, R-Indianapolis, whose territory includes Franklin Township.
Riggs lobbied personally for the bill. He said telling Mt. Vernon’s story helped lawmakers understand the situation.
“They were shocked at first,” he said. “Nobody recognized the impact on local units. I think that opened their eyes.”
The bill, effective immediately, allows MV officials to get started on addressing the debt.
“It lets us get started on refinancing now, and it lets us complete it before our 2012 payments are due,” Riggs said.
Although Mt. Vernon is on the fast track to a reconfigured revenue stream, officials know they aren’t necessarily out of the woods yet. The massive debt restructuring is on the immediate horizon, and the district must continue to live with the cuts it has already made.
“But we can see the light at the end of the tunnel,” Riggs said.